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Making a Difference in Africa

Making a Difference in Africa. The Townships Project From Microlending in South Africa to Systemic Poverty Eradication: The Next 12 Years by Martha Deacon, B.A. ( Hons ), J.D. Founder and CEO. Making a Difference in Africa. The Townships Project

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Making a Difference in Africa

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  1. Making a Difference in Africa The Townships Project From Microlending in South Africa to Systemic Poverty Eradication: The Next 12 Years by Martha Deacon, B.A. (Hons), J.D. Founder and CEO

  2. Making a Difference in Africa The Townships Project • started supporting microlending in South Africa in 1998 • currently supports Tetla Financial Solutions (around Cape Town) andPhakamani Foundation (around White River), two of South Africa’s best run microlenders

  3. Making a Difference in Africa Microlending entails • making tiny loans (starting at $100) • to the very poorest (living on $2 a day) • mostly women (98% of our clients) • in groups of 5 (each member guarantees loans of others) • to start or expand a small business (consumer loans make poverty worse)

  4. Making a Difference in Africa Microfinance refers to the whole suite of financial services for the poorest, including • loans • savings • insurance • mortgages • money transfers

  5. Making a Difference in Africa • MicroFinance Institutions (MFIs) are those institutions that provide microfinance services • The Townships Project has steadily improved its knowledge, connections and effectiveness over the past nearly 13 years…

  6. Making a Difference in Africa We’re now supporting twice as many loans each month as we did in all of the first 6 years

  7. Making a Difference in Africa

  8. Making a Difference in Africa Total Lives changed in 12 years 8 months = 174,220 About the size of Saskatoon, Regina or St. John’s Nfld.

  9. Making a Difference in Africa

  10. Making a Difference in Africa

  11. Making a Difference in Africa • We’ve built a solid foundation and in 2011 we launched a game-changing approach to eradicating systemic poverty… • By applying the world’s most successful business system – franchising – to the world’s most intractable problem – poverty

  12. Making a Difference in Africa • MicroFranchising applies the principles of franchising - branding, systematization, and replication - to tiny businesses …. • Objective: Eradicate systemic poverty

  13. Making a Difference in Africa • We found a partner - University of Cape Town’s Graduate School of Business, the premier business school on the continent • We found a major sponsor - Standard Bank, the largest bank on the continent • And we created something amazing…

  14. Making a Difference in Africa MicroFranchising Launch: Trade Show and Workshops by Martha Deacon, B.A.(Hons), J.D. Founder and CEO The Townships Project

  15. Making a Difference in Africa Report from South Africa 31 August – 2 September 2011 O.R. Tambo Recreation Centre Khayelitsha, Cape Town South Africa

  16. Making a Difference in Africa • MicroFranchising Launch was designed to address the four limiting factors in microlending • All microlenders face the same challenges… and they prevent microloans alone from eradicating systemic poverty…

  17. Making a Difference in Africa Limits to Microlending: “whack-a-mole” jealousy from lack of community support: “who do you think you are?!” Most borrowers are not entrepreneurs: they just want a job Lack of business innovation, skills and systems result in “selling rotten tomatoes to each other” Business expansion requires more $$$ than microloans can provide The Unicycle

  18. Making a Difference in Africa Getting from the Unicycle of Microlending to Four Wheel Drive Mobile and a massive job creation engine at the base of the economic pyramid by using existing tools… The Unicycle

  19. Making a Difference in Africa By adding a 2nd wheel… Asset-Based Community Development (“ABCD”) To give direction and overcome “whack-a-mole” syndrome By turning victims into activists… asking the question: “What do we have?” instead of “What do you need?” The Bicycle

  20. Making a Difference in Africa Asset-Based Community Development helps communities to understand The Leaky Bucket The Leaky Bucket provides a simple way for communities to understand their assets and their income: what they have, what’s coming in and what’s leaking out … Developed in ‘90s in Chicago with Michelle Obama’s keen involvement The Townships Project recommends the first money invested in any community be used to introduce ABCD … Getting communities to think about how they can use what they have to get what they want…

  21. Making a Difference in Africa Now add a 3rd Wheel: Corporate Social Investment/ Enterprise Development Once a community is motivated, it is ready to seek additional investment… BBBEE laws in South Africa today require about $1 billion annually spent on enterprise development… In an ABCD community, all eyes will be on this money The Three-Wheeler

  22. Making a Difference in Africa And finally the 4th Wheel: MicroFranchising and other commercial solutions Answers the lack of skills and diversity; brings the potential to systematize, replicate and brand a tiny business For 40 years franchising has created as many as 9 out of 10 successful businesses (versus as low as 1 out of 10 for stand-alones) Four- Wheel Drive

  23. Making a Difference in Africa • And now Mobile Technology Since 1998, virtually all South Africans (and about 80% of all Africans) have gained access to Mobile Telephones allowing access to: • Market information • Banking services • Money transfer • Repayments • Savings • Inventory restocking • Systems control • Accounting • Training Mobile

  24. Making a Difference in Africa Four Wheel Drive Mobile drives out systemic poverty…

  25. Making a Difference in Africa Four Wheel Drive Mobile meets MicroFranchising Launch! plus

  26. Making a Difference in Africa

  27. MicroFranchising Launch:Trade Show and Workshops Intentionally Creating a MicroFranchising Industry 31 August – 2 September 2011 in Khayelitsha, Cape Town, South Africa • Government policy makers met townships entrepreneurs met corporate entrepreneurs met franchisors met community activists met social workers met charities… • To create and support new microfranchising businesses to build a massive job creation engine at the base of the economic pyramid…

  28. MicroFranchising Launch First Plenary Session: On right: Sadi Luka, Chief Director of Community Development, Department of Social Development On left: TumeloChipfupa, Deputy Director-General, Enterprise Development, Department of Trade and Industry

  29. MicroFranchising Launch TumeloChipfupacame for 2 hours, stayed for 2 days. DTI wants The Townships Project’s MicroFranchising Launches in all 10 provinces – WHY? • Since 1995, South Africa’s economy has grown from $500 billion to $2.7 trillion; taxpayers have increased from 1.8 million to more than 10 million; taxes from $113 billion to $664 billion (The Mail and Guardian, 27 Aug 2011) yet 20 million are still living on $2/day, under and unemployed, at the base of the economic pyramid • 70% of enterprises with 5 – 50 employees, and 30% of those with 100+, started as micro-enterprises; all face the same challenges: formalization, credit, bank accounts… can be addressed by microfranchising • MicroFranchising needs to be jump-started: even Vodacom didn’t recognize the fabulous market it has enjoyed in South African townships in the past 10 years

  30. MicroFranchising Launch Sadi Luka from the Department of Social Development was elated to share the platform with the Department of Trade and Industry… WHY? • Typically the Department of Social Development just hands out the monthly grant cheques: they’ve gone from 2.9 million to 13.9 million since 1995 representing a massive monthly income in all townships, which must be used to create new business if the 20 million on $2/day are ever to escape poverty… • DSD also works with motivating communities through ABCD activities; these activities flow naturally into Department of Trade and Industry activities, aided by private/public partnerships…

  31. MicroFranchising Launch THREE CASE STUDIES From MicroFranchising Launch: Trade Show and Workshops

  32. MicroFranchising Launch • Example: Keys Communications • Challenge: Securing exclusive sites on home walls owned by grannies who resell them several times to competitors • Solution: Find the “chief” granny through local church; deal with her to build community understanding and loyalty, thereby increasing competitive uniqueness – ACHIEVED in 2 hour workshop

  33. MicroFranchising Launch • Example: Crime Scene Clean-Up • Challenge: Cost of franchise R 136,000 ($20,000) vs. township entrepreneur ability to pay about R 10,000 ($1,500) • Solution: Downsize without losing any branding, systematization or replication functions – ACHIEVED in 2 hour workshop

  34. MicroFranchising Launch • Example: Honda Scooters • Challenge: Maximizing the townships market even with 100% financing strategy; Honda thought its market was commuters to the city • Solution: Focus on micro-businesses lacking transit options rather than on city commuters; micro-businesses have credit rating with local microlenders – ACHIEVED in 2 hour workshop

  35. MicroFranchising Launch

  36. MicroFranchising Launch 1st element: Plenary Sessions

  37. MicroFranchising Launch 2nd element: Workshops

  38. MicroFranchising Launch 3rd element: Trade Show

  39. At the first everMicroFranchising Launch… • 15 businesses were workshopped to become or expand as microfranchises by a cross-section of townships people, community workers, entrepreneurs, students, charities and government policy makers • Everyone saw the power of small: microfranchising is now starting to be integrated into the mainstream at a public and private level • Intentionally creating microfranchises can be a game changer in eradicating systemic poverty

  40. Making a Difference in Africa Thank you! marthadeacon@thetownshipsproject.org www.thetownshipsproject.org Charitable Organization No. 86418 8420 RR0001

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